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CohnReznick: Report Analyzes Current State of Affordable Housing Tax Credit Properties

Published on September 13, 2017

In CohnReznick’s sixth survey of owners of properties financed with federal low-income housing tax credits from the Low-Income Housing Tax Credit (LIHTC), CohnReznick found that housing tax credit properties are operating better than any period in the program’s history. Along with the encouraging performance metrics, from a legislative awareness standpoint, the study also details the rising number of low-income renters who need affordable housing.

Providing a comprehensive overview of how housing tax credits work today, the report examines how a typical housing tax credit project is financed, how the public private partnership can foster an efficient use of the capital subsidy, why institutional investors invest in housing tax credit investments, economic occupancy strength, improvements in debt coverage ratio (DCR), and the overall strong cash flow for housing tax credit properties.

However, the report cautioned that due to market reaction to the uncertainty over corporate tax reform, the “value” of housing tax credit investments--the price at which housing tax credits trade--has generally fallen by over 10 cents between the year-end 2016 and the third quarter of 2017. If this trend continues, properties financed with housing tax credits may be forced to borrow more money from other sources to make up the difference. That could eventually weaken debt coverage ratios and cash flows for tax credit properties.

Previous Studies

The Low-Income Housing Tax Credit Program at Year 30: Recent Investment Performance (2013-2014)

Special Report: The Community Reinvestment Act and Its Effect on Housing Tax Credit Pricing

The Low-Income Housing Tax Credit Program: A Performance Update Analysis (2014)

LIHTC Program at Year 25: An Expanded Look at Its Performance (2012)

Click here to gain access to the full Housing Tax Credit Investments: High Performance and Increased Need report.